Bitcoin: Control or Liberation?

​​In 2014, at an event hosted by okcoin, economists, investors, and Bitcoin industry entrepreneurs had an interesting discussion: Will Bitcoin disappear soon, or will it be a counterattack or a change opportunity? Mai Gang, who is very popular recently, also appeared at this seminar. He is an OK investor. He Yi joined the group and He Yi introduced Changpeng to join the group. Later, Changpeng and He Yi went out to work alone and established An'an. This discussion on Bitcoin brings together the multilateral views of economists, investors and industry entrepreneurs. The views are fiercely colliding, and can be summarized into the following core camps and arguments: 1. The discussion on core topics revolves around three core issues: What is the value basis of Bitcoin? (Payment network, digital gold, or pure speculative bubble?) What is the biggest challenge facing Bitcoin? (Government regulation, substitutability, or technical limitations?) Is Bitcoin a disruptive innovation, or a dream of a counterattack by a loser? Summary of views from all parties 1. Bitcoin supporter (Theory of Change Opportunity) This camp believes that Bitcoin represents an advanced technology and concept with the potential to subvert traditional finance. 1. Mai Gang (Investor) - Core argument: Advanced payment network value source: The value of Bitcoin is first of all, it is a complete and advanced payment network. Its characteristics (such as anonymity, low cost, and high efficiency) make it the best payment system under the current technical background. Network effect: As the number of merchants and users increases, their network value will become higher and higher, which is a clear value support. Historical Perspective: He tried to compare Bitcoin with gold, believing that gold exited the historical stage not because of its own flaws, but because of the rise of the national sovereign monetary system. 2. Liang Song (media person) - Core argument: Destructive innovation and resistance narrative Weasel: represents a centralized institution (such as the central bank) that dilutes people's wealth by issuing more money. Chicken: represents ordinary people. Bitcoin: It is a decentralized and encrypted mathematical system created by the "chicken" to protect its own property, and it is a resistance to centralized exploitation. Value Identity: The first wave of supporters are technology elites such as Apple's founders, who agree with their concept of "future currency". The metaphor of "Chicken and Weasel": This vivid metaphor is the core of his argument. Why is regulated: The central bank bans Bitcoin settlement not because it is a normal bubble like garlic, but because it is a "destructive innovation" that directly challenges the existing financial power and interest structure. 3. Xu Mingxing (founder of OKCoin) - Core argument: technical non-replicability (yellow-like metallicity) Answer "fungibility": He directly refuted the view that "Bitcoin is a replicable software". Value basis: Bitcoin’s “gold-like” attribute (not replicable) is based on two points: algorithm (copyable); computing power across the entire network (extremely difficult to replicate). Computing power barriers: The current Bitcoin network is maintained by huge computing power, and its cost is comparable to the military expenditure of a small and medium-sized country. This makes the network extremely secure and difficult to forge or double spend. It is almost impossible for any new altcoin (Acoin, Bcoin) to establish such a huge computing power network in a short period of time to gain equal trust and security. Therefore, Bitcoin has de facto "scarceness" and "unreplicable". 2. Bitcoin doubt/opposition (bubble and disillusionment) This camp believes that Bitcoin has fatal flaws, either stifled by regulation, or just a short-lived speculative bubble. 1. Xie Guozhong (economist) - Core argument: Illegal use, regulatory deadline and IT bubble's actual use is black industry: He pointed out sharply that the main payment use of Bitcoin in reality is illegal transactions such as Mexican drug trafficking groups because of its "behind" nature. Legal commercial applications are just promotional gimmicks, with extremely small actual transaction volume. Regulation is insurmountable: the "behind" system that confronts the government is destined to not work. Once Bitcoin is to be compliant, it must be subject to government monitoring and invest huge costs to establish a security and legal system, which will eventually become as bloated as banks and lose all its advantages. The product of the IT bubble: He believes that Bitcoin is the embodiment of the current IT bubble. Silicon Valley's tech elites are extremely self-inflated and try to use technology to subvert all industries, including finance and central banks, which is an excessive arrogance. 2. Hong Hao (Chief Strategist) - Core argument: Strong substitutability, harmful volatility, and zero-sum game is essentially software: He believes that Bitcoin is essentially just a software, and has very strong substitutability. Its success will only spawn countless similar electronic currencies, thus diluting its value. The counterattack of the Diaosi is a false proposition: he used **"smart chicken and stupid chicken" to refute the statement that the "Diaosi counterattack". The myth of Bitcoin’s wealth creation is essentially a zero-sum game where "smart chicken" (early players) use information gap to harvest "stupid chicken" (later retail investors), which is based on the failure of other losers. The government must intervene: Infringement of sovereignty: issuing coins is the core power of the government, and Bitcoin infringes on this power. Harmful holders: Their violent price fluctuations will cause huge losses to holders (the "inflation cost" in economics). The government can tolerate garlic being hyped, but it will never tolerate the monetary system that concerns the national economy and people's livelihood being hyped like this. The summary of this discussion clearly outlines two main aspects of Bitcoin dispute: the dispute between concepts and narratives: one side regards it as a revolutionary tool to resist centralization and protect private property (the story of chicken and weasel); the other side regards it as a dangerous commodity that encourages illegal activities and will eventually be strangled by regulation. The dispute between technology and reality: One side emphasizes the scarcity and security of its technology guaranteed by huge computing power; the other side believes that the replicability of its software and its fragility in the face of supervision in reality are its fatal weaknesses. In the end, the debate was inconclusive, but it wonderfully demonstrated the profound differences arising from multiple dimensions such as technological ideals, financial reality, macroeconomics and regulatory politics. We look back at this discussion after 11 years, and everyone has their own answers.​​​​